John Fund explores in this OpinionJournal piece the risk that long-standing Louisiana elements of corruption are likely to hijack a good part of the extraordinary amount of federal aid that will be flowing into the state in the wake of Hurricane Katrina. That reality is likely not going to stop or slow the flow of such aid because, as William Easterly points out in this Foreign Policy (pdf) piece, such aid has the following beneficial effect:

The poor have neither the income nor political power to hold anyone accountable for meeting their needs–they are political and economic orphans. The rich-country public knows little about what is happening to the poor on the ground in struggling countries. The wealthy population mainly just wants to know that “something is being done” about such a tragic problem as world poverty. The utopian plans satisfy the “something-is-being-done” needs of the rich-country public, even if they don’t serve the needs of the poor.

Confronted with this confounding state of affairs, Stephen E. Landsburg proposes this innovative choice for spreading the federal aid to the victims of Katrina:

Before we spend $200 billion on New Orleans disaster relief, can we just pause for about three seconds, please? That should be long enough to divide one number by another. The numbers I have in mind are, on the one hand, $200 billion, and, on the other hand, 1 million people—the prestorm population of the New Orleans area, broadly defined.
Two-hundred billion divided by 1 million is 200,000. For the cost of reconstructing New Orleans, the government could simply give $200,000 to every resident of the region—that’s $800,000 for a family of four. Given a choice, which do you think the people down there would prefer?

Based on my anecdotal experience in talking with New Orleans evacuees during Houston’s relief effort, I can say unequivocally that every evacuee would prefer to receive direct aid over throwing federal relief funds into the black hole that is Louisiana state government.
Hat tip to Arnold Kling for the lines to the Easterly and Landsburg pieces.

This previous post explored the role of federally-subsidized flood insurance in attracting capital investment in New Orleans that probably would not have occurred had the owners of the capital been faced with paying the cost of private flood insurance. Until Hurricane Rita developments took us a bit off track, I had been meaning to pass along this NY Times article about a batch of lawsuits by plaintiff’s lawyers and Mississippi Attorney General Jim Hood that seek to eviscerate flood exclusion provisions in homeowner’s liability insurance constracts and make the insurers responsible for damages caused by flooding from Hurricane Katrina For those of us who prefer to pay less rather than more for such insurance, these lawsuits are a real bad idea, as the following and this OpinionJournal piece explain.

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